Conoco Executive: On Track To Spend $5 Billion In Share Buybacks In 1st Half

04/16/2012| 01:38pm US/Eastern

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   By Isabel Ordonez 
   Of  
 

ConocoPhillips (>> ConocoPhillips) said Monday it is on track to spend $5 billion on share repurchases in the first half of the year and that it expects to spend the same amount in the second half.

Speaking to analysts in a conference call, ConocoPhillips incoming Chief Executive Ryan Lance said the company expects to fund the share buybacks with the proceeds of its previously announced asset sale, which this year is estimated to be $8 billion to $10 billion.

Lance, who will assume his new position when the spin-off of ConocoPhillips' refining arm is completed May 1, said the company is evaluating the disposition of assets that no longer are strategic for a stand-alone production company. The executive didn't specify the assets.

ConocoPhillips is at the end of a three-year restructuring plan aimed at improving its finances and creating more value for shareholders. The plan includes a large scale asset sale and the spin-off of its refining, chemical and pipeline segments into an independent company, named Phillips 66. ConocoPhillips will become a pure oil and gas exploration and production firm.

Lance confirmed ConocoPhillips plans to have an annual capital expenditure budget of about $15 billion through 2016 and compound annual production growth between 3% and 5% in the same period. Production growth is expected to be driven by the development of an oil-sand project in Canada, several shale fields the U.S., offshore projects in U.K.'s North Sea and Malasia and the Australian Pacific LNG project in Australia, the company said.

Conoco also expects to grow its cash flow to $22 billion by 2016, up from about $16 billion this year, and it plans to spend about 20% to 25% of its annual cash flow on dividends.

ConocoPhillips is looking for opportunities to acquire more shale properties internationally as it believes it can transfer the knowledge it has acquired developing unconventional fields in the U.S. overseas, Lance said. Conoco currently has shale assets in Poland.

Separately, ConocoPhillips also announced Monday the names of the future board of directors for Phillips 66.

Greg Garland, who previously was named president and chief executive of the company, will serve as chairman of the board. He was previously CEO of Chevron Phillips Chemical.

Other directors include: J. Brian Ferguson, who was chairman and CEO of Eastman Chemical Co. (>> Eastman Chemical Company), and currently serves on the boards of Owens Corning (>> Owens Corning) and NextEra Energy Inc. (>> NextEra Energy, Inc.); William R. Loomis Jr., who has been an independent financial advisor since 2009 and currently serves on the boards of Pacific Capital Bancorp (PCBC) and Limited Brands Inc. (>> Limited Brands, Inc.), and is also a senior advisor to Lazard LLC (>> Lazard Ltd) and China International Capital Corporation; John E. Lowe, who currently serves as assistant to the CEO of ConocoPhillips and serves on the board of Agrium Inc.; Harold W. McGraw III, who currently serves as chairman, president and CEO of The McGraw-Hill Cos. (>> The McGraw-Hill Companies, Inc.); Glenn F. Tilton, chairman of the Midwest of J.P. Morgan Chase & Co. (>> JPMorgan Chase & Co.) and was previously chairman and CEO of United Airlines Inc.; and Victoria J. Tschinkel, chairwoman of 1000 Friends of Florida. She currently serves on the board of ConocoPhillips.

All elections will be effective at the completion of ConocoPhillips' spinoff, the company said.

-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207; isabel.ordonez@dowjones.com

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